Tesla believers will likely view Volvo’s declaration that every new car made in 2019 and beyond will have an electric motor as a validation of CEO Elon Musk’s vision of a future of sustainable, electric transportation, Barclays auto analyst Brian A. Johnson wrote in a research note Wednesday.

Johnson takes a different, and darker, view, saying it provides more evidence (especially after a recent visit to China) that “Tesla will face intense competition by next decade” from legacy automakers who are expanding their electric options.

Johnson makes three points that he describes as “reality checks” on Tesla’s valuation. His main points:

1. While Tesla might have a lead in battery costs, at least outside of China, other scale advantages of legacy automakers likely means the cost-per-vehicle advantage will not be meaningful. (Johnson did admit that Tesla is well ahead on key tech components such as software, Big Data, and the ability to improve performance and fix bugs via “over-the-air” software updates.)
2. Tesla faces competition not just from pure all-electrics, but from hybrids. Johnson notes that nearly every major automakers is planning to roll out 48-volt hybrids and many may offer plug-in hybrids.
3. China’s competitive environment is “stacked against Tesla” even though regulatory pressures there makes it a prime market for electric and plug-in electric vehicles. His argument: plug-in hybrids and low-end EVs are “vastly more popular” than Tesla, local regulations favors local companies, a flood of cheap Chinese batteries will negate any advantages from the multi-billion battery factory Tesla is building near Reno, Nev.

Of course, Musk’s reaction to all of this will likely follow previous comments about automakers deciding to produce electric vehicles: the more, the merrier.